Investors are piling into bitcoin exchange-traded funds, betting the supply overhang that's pushed the token lower in past weeks has created a buying opportunity.
U.S. bitcoin ETFs have seen a net inflow of $438 million over the past two trading sessions, data compiled by Bloomberg shows. The original cryptocurrency has tumbled about 20% since early June, squeezed by concerns that creditors of the failed exchange Mt. Gox will start to offload tokens the estate is distributing.
"So many investors still don't own bitcoin, and that underpins the long-term bull case," Charlie Morris, chief investment officer at ByteTree, wrote in a note. "This supply storm will soon pass."
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Bitcoin's decline from its March record accelerated last week after Mt. Gox's administrators started the process of returning about $8 billion worth of the token to creditors. At the same time, German police started selling some of the 50,000 bitcoin they had seized earlier from a piracy website.
Bitcoin rose as much as 3.3% on Tuesday to $58,100, but it remains some $15,000 below March's record high.
"Supply has been a big concern, and the known overhang from the liquidation related to Mt. Gox and the German Federal Criminal Police Office," Chris Weston, head of research at Pepperstone, wrote in a Tuesday note. "That said, the markets know there is an endpoint to the liquidation of these coins."
